Qantas Airways Limited 1H17 Results Supplementary Presentation 23 - - PowerPoint PPT Presentation

Qantas Airways Limited 1H17 Results

Supplementary Presentation 23 February 2017 ASX:QAN US OTC:QABSY

Group Performance

3

• 1. Underlying PBT is a non-statutory measure and is the primary reporting measure used by the chief operating decision-making bodies, being the Chief Executive Officer, Group Management Committee and the

Board of Directors, for the purpose of assessing the performance of the Qantas Group. All items in the 1H17 Results Presentation are reported on an Underlying basis. Refer to Supplementary slide 6 for a reconciliation of Underlying to Statutory PBT. 2. Return on invested capital. 3. Ticketed passenger revenue divided by available seat kilometres (ASKs). Group Domestic Unit Revenue declined 2% compared to

• 1H16. Group International Unit Revenue declined 7% compared to 1H16. 4. Underlying PBT less ticketed passenger revenue per available seat kilometre (ASK). 5. Underlying PBT less ticketed passenger revenue,

fuel and share of profit/(loss) of investments accounted for under the equity method, adjusted for the impact of changes in FX rates, discount rates and other actuarial assumptions per ASK. 6. Available seat

• kilometres. Total number of seats available for passengers multiplied by the number of kilometres flown. 7. Revenue seat kilometres. Total number of passengers carried multiplied by the number of kilometres flown.
• 8. Variance to 1H16. 9. Weighted Average Cost of Capital calculated on a pre-tax basis.

1H17 1H16 VLY %8 Comments Underlying PBT1 ($M) 852 921 (7.5) Underlying PBT per share (c) 45.1 42.7 5.6 Reflecting value of share buy-back Statutory Profit Before Tax ($M) 715 983 (27) Statutory Earnings Per Share (c) 27.3 31.9 (14) Includes the benefit of reduction in shares on issue Rolling twelve month ROIC2 (%) 21.7 22.8 (1.1)pts All segments delivering ROIC > WACC9 Revenue ($M) 8,184 8,463 (3.3) Transformation benefits realised to date ($M) 1,867 1,359 37 $212m delivered in 1H17 Operating cash flow ($M) 1,173 1,373 (15) Net Debt ($B) 6.0 5.6 (7.1) Within target range; Capex weighted to first half Unit Revenue (RASK)3 8.02 8.46 (5) Total Unit Cost4 (c/ASK) 6.90 7.23 5 Unit Cost reduction includes fuel movements Ex-fuel Unit Cost5 (c/ASK) 5.00 4.90 (2) Effect of right sizing aircraft, protects margin Available Seat Kilometres6 (ASK) (M) 75,732 74,650 1.4 Capacity increase largely directed Asian growth markets Revenue Seat Kilometres7 (RPK) (M) 61,348 60,652 1.1

1H17 Key Group Financial Metrics

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$M 1H17 1H16 VLY % Net passenger revenue 7,064 7,307 (3.3) Unit Revenue decline of five percent with significant international market capacity growth and domestic resources decline. Partially

• ffset by increase in flying activity embedded through increased

utilisation Net freight revenue 416 458 (9.2) Excess international market freight capacity and reduction in fuel surcharges due to lower fuel prices Other revenue 704 698 0.9 Growth in Loyalty adjacent businesses Total Revenue 8,184 8,463 (3.3) Operating expenses (excluding fuel) (4,885) (4,883)

• Transformation initiatives offsetting increases in activity and CPI

Fuel (1,489) (1,716) 13 Favourable hedging strategies and fuel transformation initiatives Depreciation and amortisation (677) (585) (16) Aircraft operating lease refinancing and A330 and B738 reconfigurations Non-cancellable aircraft operating lease rentals (192) (254) 24 Aircraft operating lease refinancing and the impact of FX on non- AUD denominated leases Share of net profit/(loss) of investments accounted for under the equity method 8 6 33 Total Expenditure (7,235) (7,432) 3 Underlying EBIT 949 1,031 (8.0) Net finance costs (97) (110) 12 Underlying PBT1 852 921 (7.5)

Underlying Income Statement Summary

• 1. Underlying PBT is a non-statutory measure and is the primary reporting measure used by the chief operating decision-making bodies, being the Chief Executive Officer, Group Management Committee and the

Board of Directors, for the purpose of assessing the performance of the Qantas Group. All items in the 1H17 Results Presentation are reported on an Underlying basis. Refer to Supplementary slide 6 for a reconciliation of Underlying to Statutory PBT.

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Items Not Included in Underlying PBT

• 1. Payable to non-executive employees. 2. Items which are identified by Management and reported to the chief operating decision-making bodies as not representing the underlying performance of the business are

not included in Underlying PBT. The determination of these items is made after consideration of their nature and materiality and is applied consistently from period to period. Items not included in Underlying PBT primarily result from revenues and expenses relating to business activities in other reporting periods, major transformational/restructuring initiatives, transactions involving investments and impairments of assets and

• ther transactions outside the ordinary course of business.

$M 1H17 1H16 Ineffectiveness and non-designated derivatives relating to other reporting periods (1) 14 Net gain on sale of property, plant and equipment

• (201)

Gain on sale of Sydney Airport Terminal 3 in September 2015 Transformation costs 73 48 Redundancies, restructuring and other costs as part of the Qantas Transformation Program Wage Freeze and Record Results employee bonuses1 80 67 Wage Freeze and Record Results bonuses announced in July 2015 and August 2016 respectively Net impairment reversal (20)

• Reversal of impairment on Helloworld investment

Other 5 10 Total items not included in Underlying PBT2 137 (62)

6

Reconciliation to Underlying PBT

• 1. Underlying PBT is a non-statutory measure and is the primary reporting measure used by the chief operating decision-making bodies, being the Chief Executive Officer, Group Management Committee and the

Board of Directors, for the purpose of assessing the performance of the Qantas Group. All items in the 1H17 Results Presentation are reported on an Underlying basis. This slide provides a reconciliation of Underlying to Statutory PBT

$M 1H17 1H16 Statutory Ineffectiveness relating to

• ther reporting

periods Other items not included in Underlying PBT Underlying1 Statutory Ineffectiveness relating to

• ther reporting

periods Other items not included in Underlying PBT Underlying1 Net passenger revenue 7,064

• 7,064

7,307

• 7,307

Net freight revenue 416

• 416

458

• 458

Other revenue 704

• 704

698

• 698

Total Revenue 8,184

• 8,184

8,463

• 8,463

Operating expenses (excl fuel) (5,015)

• 138

(4,877) (4,801)

• (76)

(4,877) Fuel (1,488) (1)

• (1,489)

(1,729) 13

• (1,716)

Depreciation and amortisation (677)

• (677)

(585)

• (585)

Non-cancellable aircraft operating lease rentals (192)

• (192)

(254)

• (254)

Total Expenditure (7,372) (1) 138 (7,235) (7,369) 13 (76) (7,432) EBIT 812 (1) 138 949 1,094 13 (76) 1,031 Net finance costs (97)

• (97)

(111) 1

• (110)

PBT 715 (1) 138 852 983 14 (76) 921

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1H16 1H17

Revenue Detail

Net passenger revenue down 3%

• Group Unit Revenue decreased five percent

– Significant international market capacity putting pressure on yields – Moderating decline in resources sector demand

• Reduced domestic capacity offset by growth in international capacity

through redeployment of existing Group fleet Net freight revenue down 9%

• Impact of FX reducing inbound air freight demand
• International markets remain challenged with significant wide body

capacity impacting yields

• Fuel surcharge reductions

Frequent flyer redemption, marketing, store and other revenue up 2%

• Launch of Assure in March 2016
• Growth in adjacent businesses including Red Planet
• Impact of changes to Woolworths program

Revenue from other sources down 1%

• Reduction in retail advertising revenue following sale of Sydney

Terminal in September 2015

RPKs (m) 60,652 1% 61,348 ASKs (m) 74,650 1% 75,732

Revenue ($B)

8.2 (3)% 8.5

8

1H16 1H17

Expenditure1 Detail

• 1. All expenditure is presented on an Underlying basis which excludes hedge effectiveness relative to other reporting periods and other items not included in Underlying PBT.

Fuel costs down 13%

• Benefit from lower jet fuel prices compared to 1H16
• Improvement in fuel efficiency from Qantas Transformation fuel initiatives
• Offset by higher consumption from increased flying

Manpower and staff-related up 5%

• Operational head count increase with increase in flying activity
• Growth of Qantas Loyalty business headcount
• Benefits from workplace agreements with 18-month wages freeze, offset

by increases for employee groups who have completed wages freeze Aircraft operating variable costs up 1%

• One percent increase in flying activity

Depreciation and amortisation costs up 16%

• Refinancing of aircraft out of operating leases to unencumbered/owned

aircraft

• Reconfiguration of A330 and B738 aircraft

Lease rental expense down 24%

• Reduction in aircraft operating leases through refinancing of leased

aircraft

• FX impact on USD-denominated leases
• Commencement of 2 x A321 leases

Other expenditure down 9%

• Non-cash impact of changes in discount rates and actuarial assumptions
• Reduction in commissions in line with revenue decline

ASKs (m) 74,650 1% 75,732

Expenditure ($B)

7.4 7.2 3%

9

Cash Flow

• 1. Cash from operating activities less net cash used in investing activities (excluding aircraft operating lease refinancing).
• Positive net free cash flow1 of $288m

– Strong operating cash flows of $1.2b

• 1H16 included $185m proceeds from the

sale of Sydney Airport Terminal 3 – Investing cash flows of $885m excluding aircraft operating lease refinancing

• 1H16 included $350m proceeds from the

sale of Sydney Airport Terminal 3

• $327m related to the refinancing of 9 aircraft out
• f operating leases
• New borrowings of $422m bond issuance and

repayments of $227m short term amortising debt repayments

• 87m shares bought back during 1H17 for $275m
• Dividend payment of $134m

$M 1H17 1H16 VLY % Operating cash flows 1,173 1,373 (15) Investing cash flows (excluding aircraft operating lease refinancing) (885) (603) (47) Net free cash flow1 288 770 (63) Aircraft operating lease refinancing (327) (587) 44 Financing cash flows (271) (807) 66 Cash at beginning of period 1,980 2,908 (32) Effects of FX on cash (2) 7 >(100) Cash at end of period 1,668 2,291 (27)

10

Invested Capital Calculation

• 1. For calculating ROIC, capitalised operating leased aircraft are included in the Group’s Invested Capital at the AUD market value (referencing AVAC) of the aircraft at the date of commencing operations at the

prevailing AUD/USD rate. This value is depreciated in accordance with the Group’s accounting policies with the calculated depreciation expense known as notional depreciation. The carrying value (AUD market value less accumulated notional depreciation) is reported within Invested Capital as capitalised operating leased aircraft assets. 2. Equal to the 12 months average of monthly Invested Capital.

• Refinanced 9 operating leased aircraft to

unencumbered owned aircraft – Decrease in capitalised operating leased assets – Increase in property, plant and equipment

• Capex > depreciation with FY17 capex weighted to

1H17

$M 12 mths to Dec 16 12 mths to Dec 15 Receivables (current and non-current) 971 967 Inventories 352 337 Other assets (current and non-current) 590 459 Investments accounted for using the equity method 238 193 Property, plant and equipment 12,168 11,578 Intangible assets 956 837 Assets classified as held for sale 14 88 Payables (2,161) (1,944) Provisions (current and non-current) (1,143) (1,134) Revenue received in advance (current and non-current) (4,787) (4,910) Capitalised operating leased assets1 2,112 2,537 Invested Capital 9,310 9,008 Average Invested Capital2 8,708 8,936

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Net Debt

• 1. Net on balance sheet debt includes interest-bearing liabilities and the fair value of hedges related to debt reduced by cash and cash equivalents. 2. Capitalised aircraft operating lease liabilities are measured at fair

value at the lease commencement date and remeasured over lease term on a principal and interest basis akin to a finance lease. Residual value of capitalised aircraft operating lease liability denominated in foreign currency is translated at the long-term exchange rate. 3. Net debt includes on balance sheet debt and capitalised aircraft operating lease liabilities under the Group’s Financial Framework. 4. A$250m with a semi- annual coupon of 4.40% per annum, maturing in October 2023, and A$175m with a semi-annual coupon of 4.75% per annum, maturing in October 2026.

• Two medium term notes of $425m at

favourable rates and long tenor of 7 and 10 years4

• Repayment of $227m in short term amortising

debt repayments borrowings, largely secured debt

• Reduction in aircraft operating lease liabilities

with the refinancing of an additional 9 aircraft

• ut of operating leases

$M 1H17 FY16 VLY Current interest bearing liabilities on balance sheet 439 441 (2) Non-current interest bearing liabilities on balance sheet 4,653 4,421 232 Fair value of hedges related to debt (3) (2) (1) Cash at end of period (1,668) (1,980) 312 Net on Balance Sheet Debt1 3,421 2,880 541 Capitalised aircraft operating lease liabilities2 2,546 2,766 (220) Net Debt3 5,967 5,646 321

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Net Debt Movement

$M Opening Net Debt (30 June 16) 5,646 Net cash from operating activities (1,173) Principal portion of aircraft operating lease rentals (119) Funds From Operations (1,292) Net cash from investing activities 1,212 Aircraft operating lease refinancing (327) New operating leases 138 Net Capex 1,023 Dividend paid to shareholders 134 Payments for share buy-back 275 Shareholder Distributions 409 Payment for treasury shares 65 FX revaluations and other fair value movements 116 Closing Net Debt (31 December 16) 5,967

13

Total Unit Cost

• 1. Underlying PBT less ticketed passenger revenue per ASK. 2. Underlying PBT less ticketed passenger revenue, fuel and share of profit/(loss) of investments accounted for under the equity method, adjusted for the

impact of changes in FX rates, discount rates and other actuarial assumptions per ASK.

C/ASK 1H17 1H16 VLY % Total Unit Cost1 6.90 7.23 (5) Excluding: Fuel (1.97) (2.30) Change in FX rates

• (0.02)

Impact of changes in the discount rate and other actuarial assumptions 0.06 (0.02) Share of net profit/(loss) of investments accounted for under the equity method 0.01 0.01 Ex-Fuel Unit Cost2 5.00 4.90 (2)

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Target Progress to Date Metric Timeframe

ACHIEVING OUR TARGETS

Accelerated Transformation Benefits $2.1b gross benefits >10% Group ex-fuel expenditure reduction1 FY17 $1.9b benefits realised Ex-fuel expenditure reduced by 9%2 5,000 FTE reduction FY17 4,735 FTE reduction3 Deleverage Balance Sheet >$1b debt reduction4 FY15 Delivered on schedule Debt / EBITDA5 < 3.5x FFO / net debt6 > 45% FY17 Delivered ahead of schedule Cash Flow Sustainable positive free cash flow7 FY15 onwards Delivered on schedule Fleet Simplification 11 fleet types to 7 FY16 8 fleet types Retaining 2 x non-reconfigured B747 Customer And Brand Customer Advocacy (NPS) Ongoing Strong NPS results across the business8 Maintain premium on-time performance at Qantas Domestic Ongoing Premium on-time performance at 86% with shorter turn times9

Qantas Transformation Scorecard

• 1. Target assumes steady FX rates and capacity. 2. Includes Underlying operating expenses (excluding fuel), depreciation and amortisation (excluding depreciation reduction from Qantas International non-cash fleet

impairment) and non-cancellable aircraft operating lease rentals, adjusted for movements in FX rates and capacity. 1H17 vs 1H14. 3. Actioned Full Time Equivalent employee reduction as at 31 December 2016.

• 4. Reduction in net debt including capitalised operating lease liabilities. 5. Management’s estimate based on Moody’s methodology. 6. Managements estimate based on Standard and Poor's methodology. 7. Net free

cash flow is operating cash flows less investing cash flows (excluding aircraft operating lease refinancing). Net free cash flow is a measure of the amount of operating cash flows that are available (i.e. after investing activities) to fund reductions in net debt or payments to shareholders. 8. Measured as average 1H17 Net Promoter Score. 9. Qantas mainline operations (excluding QantasLink) for 1H17 compared to 1H16. Source: BITRE.

Group Operational Information

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Fleet at 31 December 2016

• 1. Includes Jetstar Asia fleet (18 x A320), excludes Jetstar Pacific, and Jetstar Japan. 2. Qantas Group wet leases 2 x B747-400 freighter aircraft and 4 x BAe146 freighter aircraft (not included in the table).
• 3. Includes purchased and operating leased aircraft.
• Net addition3 of 5 aircraft in 1H17

– 2 x A321-200 – 3 x F100

• Increased cross-utilisation of A330-200 and B737-800

between Qantas International and Qantas Domestic,

• ptimising capacity to match demand
• Ongoing capacity right sizing in the domestic markets to

meet demand through: – Down gauge of B737-800 services to B717 services – Down gauge of B717 services to F100 services – Down gauge of B717 services to Q400 services

Aircraft Type 1H17 FY16 Change A380-800 12 12

• B747-400

5 5

• B747-400ER

6 6

• A330-200

18 18

• A330-300

10 10

• B737-800NG

75 75

• Total Qantas

126 126

• B717-200

20 20

• Q200/Q300

14 14

• Q400

31 31

• Total QantasLink

65 65

• F100

17 14 3 Total Network Aviation 17 14 3 Q300 5 5

• A320-2001

71 71

• A321-200

8 6 2 B787-8 11 11

• Total Jetstar

95 93 2 B737-300SF 4 4

• B767-300SF

1 1

• Total Freight2

5 5

• Total Group

308 303 5

Supplementary Segment Information

18

Jetstar Group

• 1. Including Jetstar Australia and New Zealand, Jetstar Asia, Jetstar Pacific and Jetstar Japan. 2. Based on voting rights. 3. Includes Jetstar Trans-Tasman services commenced in 2005, Jetstar New Zealand

(Domestic) services commenced in 2009, Jetstar New Zealand (Regional) services commenced in December 2015. 4. Jetstar Pacific rebranded in 2008. 5. Excludes three seasonal wet lease aircraft.

1 2 3 4 5

Jetstar Group – Network of Routes1 BUSINESS OWNERSHIP2 LAUNCH AIRCRAFT ❶Jetstar Australia 100% 2004 52 x A320s/A321s ❷Jetstar International 100% 2006 11 x B787s ❸Jetstar New Zealand3 100% 2009 9 x A320s 5 x Q300s ❹Jetstar Asia (Singapore) 49% 2004 18 x A320s ❺Jetstar Japan 33% 2012 20 x A320s ❻Jetstar Pacific (Vietnam)4 30% 2008 14 x A320s/A321s5

6

177 1H17 179 FY16 151 FY15 FY14 130 FY13 129 FY12 115 FY11 109 FY10 98 FY09 96 FY08 82 FY07 67 FY06 59 FY05 39 FY04 31

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Jetstar Domestic

• 1. Underlying EBIT. 2. Operating margin calculated as Underlying EBIT divided by total segment revenue.

Jetstar Domestic 1H17 1H16 VLY % ASKs M 9,662 9,750 (0.9) RPKs M 8,080 8,273 (2.3) Passengers ‘000 6,831 6,962 (1.9) Seat factor % 83.6 84.8 (1.2)pts

• Underlying EBIT of $151m
• Consistent strong earnings1 with healthy operating margins2,

ROIC > WACC

• Continuing to leverage fleet size, network and frequency

advantage over competitors

• Entry into service of two additional leased A321 aircraft in

December 2016

• Continued innovation and investment in customer, cost

reduction and revenue enhancement MAINTAIN LCC LEADERSHIP IN THE AUSTRALIAN DOMESTIC MARKET

20

Jetstar International (Australia outbound and New Zealand)

• Record half year earnings1 driven by B787-8 performance
• Long-haul business focused on Asian markets where Jetstar is

strategically advantaged − Growth in key outbound leisure markets of Bali and Phuket − Linking Australia with Jetstar airlines in Asia to leverage and further strengthen the brand across the region − New market development with two direct services to Vietnam departing Sydney and Melbourne from May 20172 RECORD EARNINGS, IMPROVED NEW ZEALAND PERFORMANCE

Jetstar International

(incl. New Zealand Domestic and Regional,

• excl. Jetstar Asia)

1H17 1H16 VLY % ASKs M 11,007 10,535 4.5 RPKs M 9,188 8,481 8.3 Passengers ‘000 3,135 2,720 15 Seat factor % 83.5 80.5 3.0pts

• 1. Underlying EBIT. 2. Subject to government and regulatory approval.
• Dual brand strategy in the New Zealand market performing strongly

− Confirmed as a New Zealand Government domestic travel supplier − New Zealand regionals performing ahead of expectations

21

Jetstar Airlines in Asia1

• 1. Jetstar Airlines in Asia includes Jetstar Asia (Singapore), Jetstar Japan and Jetstar Pacific. 2. Underlying EBIT. 3. Low Cost Carrier. 4. Measured as percentage of market share. Source: Diio. 5. Measured as Net

Promoter Score (NPS) for Jetstar Asia (Singapore), and Jetstar Pacific. Based on Jetstar internal reporting. 6. Source: International Air Transport Association (IATA) 18 October 2016.

• Earnings2 improvement compared to 1H16

– Jetstar Japan scale grows with international expansion, largest Japanese LCC3 in market4, profitability2 continues to improve – Jetstar Asia (Singapore) remains profitable2 despite competitive market, enhanced by interline and codeshare agreements – Jetstar Pacific incurring losses2 as Vietnam domestic capacity growth intensifies

• Strong customer advocacy5 driven by localised Jetstar market

positioning and customer experience WELL POSITIONED FOR SUCCESS IN THE FASTEST GROWING PASSENGER MARKET IN THE WORLD6

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Overview of Qantas Loyalty Value Chain

• 1. Qantas Frequent Flyer. 2. Qantas Business Rewards. 3. External plus internal Billings. 4. Breakage is recognised at the time of points earn / issuance based on an estimated breakage rate. There is no further

recognition of breakage at the time of points expiry. However, the actual rate of breakage is used to inform the estimated breakage rate for initial recognition.

Business Model

Coalition Loyalty Adjacent Businesses

Leveraging core to diversify & grow Red Planet Taylor Fry Qantas Cash Qantas Golf Qantas epiQure Accumulate Qantas Assure Core earnings stream (QFF1 + QBR2) Core Innovations

Diversification

Marketing Revenue: percentage of price per

point recognised upfront for the service Loyalty provides its Earn Partners. An allowance for breakage4 is factored into the percentage.

Redemption Margin: the difference between

redemption revenue and redemption cost. Redemption Revenue: recognises the deferred value of the award (price per point less marketing revenue) at time of redemption. Redemption Cost: recognises the cost of the award at the time of redemption.

Working Capital: interest income on the cash

held.

Other Revenue: Income from adjacent

businesses, breakout growth and core innovations.

Billings3

(Cash inflow)

Deferred Revenue

Redemption Revenue Redemption Cost

Marketing Revenue

Year 0 Year 2 1 2

Redemption Margin

Points Earned ~2 year point-cycle Points Redeemed

3

(interest revenue)

Sources of Value

4

Margin on Points

23

This Presentation has been prepared by Qantas Airways Limited (ABN 16 009 661 901) (Qantas). Summary information This Presentation contains summary information about Qantas and its subsidiaries (Qantas Group) and their activities current as at 23 February 2017, unless otherwise stated. The information in this Presentation does not purport to be complete. It should be read in conjunction with the Qantas Group’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. Not financial product advice This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Qantas shares and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Qantas is not licensed to provide financial product advice in respect of Qantas shares. Cooling off rights do not apply to the acquisition of Qantas shares. Not tax advice Tax implications for individual shareholders will depend on the circumstances of the particular shareholder. All shareholders should therefore seek their own professional advice in relation to their tax position. Neither Qantas nor any of its officers, employees or advisers assumes any liability or responsibility for advising shareholders about the tax consequences of the return of capital and/or share consolidation Financial data All dollar values are in Australian dollars (A$) and financial data is presented within the six months ended 31 December 2016 unless otherwise stated. Future performance Forward looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. An investment in Qantas shares is subject to investment and other known and unknown risks, some of which are beyond the control of the Qantas Group, including possible delays in repayment and loss of income and principal invested. Qantas does not guarantee any particular rate of return or the performance of the Qantas Group nor does it guarantee the repayment of capital from Qantas or any particular tax treatment. Persons should have regard to the risks outlined in this Presentation. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this Presentation. To the maximum extent permitted by law, none of Qantas, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use

• f the information contained in this Presentation. In particular, no representation or warranty, express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of

any forecasts, prospects or returns contained in this Presentation nor is any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and

• contingencies. Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives

and financial circumstances. Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Not an offer This Presentation is not, and should not be considered, an offer or an invitation to acquire Qantas shares or any other financial products. ASIC GUIDANCE In December 2011 ASIC issued Regulatory Guide 230. To comply with this Guide, Qantas is required to make a clear statement about whether information disclosed in documents other than the financial report has been audited or reviewed in accordance with Australian Auditing Standards. In line with previous years, this Presentation is unaudited. Notwithstanding this, the Presentation contains disclosures which are extracted or derived from the Consolidated Interim Financial Report for the half year ended 31 December 2016 which has been reviewed by the Group’s Independent Auditor.

Disclaimer & ASIC Guidance